The Local Economic and Welfare Consequences of Hydraulic Fracturing

124 Pages Posted: 21 Dec 2016 Last revised: 25 Jul 2018

See all articles by Alexander Bartik

Alexander Bartik

Massachusetts Institute of Technology (MIT), Department of Economics, Students

Janet Currie

National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA); Princeton University

Michael Greenstone

University of Chicago - Department of Economics; Becker Friedman Institute for Economics; National Bureau of Economic Research (NBER)

Christopher R. Knittel

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: July 15, 2018

Abstract

Exploiting geological variation and timing in the initiation of hydraulic fracturing, we find that fracing leads to sharp increases in oil and gas recovery and improvements in a wide set of economic indicators. There is also evidence of deterioration in local amenities, which may include increases in crime, noise, traffic and declines in health. Using a Rosen-Roback-style spatial equilibrium model to infer the net welfare impacts, we estimate that willingness-to-pay (WTP) for allowing fracing equals about $2,400 per household annually (5.2% of household income), although WTP is heterogeneous, ranging from more than $10,000 to roughly zero across ten shale regions.

Suggested Citation

Bartik, Alexander and Currie, Janet and Greenstone, Michael and Knittel, Christopher R., The Local Economic and Welfare Consequences of Hydraulic Fracturing (July 15, 2018). Available at SSRN: https://ssrn.com/abstract=2692197 or http://dx.doi.org/10.2139/ssrn.2692197

Alexander Bartik

Massachusetts Institute of Technology (MIT), Department of Economics, Students ( email )

Cambridge, MA
United States

HOME PAGE: http://economics.mit.edu/grad/abartik

Janet Currie

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Princeton University ( email )

Princeton, NJ 08544-1021
United States
6092587393 (Phone)

HOME PAGE: http://www.princeton.edu/~jcurrie

Michael Greenstone (Contact Author)

University of Chicago - Department of Economics

1126 East 59th Street
Chicago, IL 60637
United States

Becker Friedman Institute for Economics ( email )

Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Christopher R. Knittel

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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